Nov. 11--Iowa securities regulators are issuing a new caution to investors in Energae LP, and with Darrell Duane Smith, one of the company's key figures.
Roseanne Mead, assistant insurance commissioner and securities administrator with the Iowa Insurance Division, says the division is "investigating possible violations" of the agency's April 10, 2013, cease and desist order, which initially prohibited Smith, of Forest City, Iowa, from selling unregistered securities. That was followed up by a July 15 agreement in which Smith consented to an order that permanently revoked his securities and insurance.
In a letter to investors dated Oct. 28, Mead says, "There are reports that Mr. Smith has contacted previous investors to invest in or loan money to him or to Energae or to other business ventures. We have also received reports that Mr. Smith has been asking investors to make checks out to certain trust fund accounts.
"We strongly caution investors to contact the Division or your investment professional before making any further investment or purchases or loans to Energae, the related companies or Darrell Smith in any form."
Mead suggests investors contact the agency at email@example.com, or call toll-free to 877-955-1212.
Other legal fronts
Here are updates to other Energae-related cases:
--No announcement from federal officials has been made after the Oct. 3 raid of offices and homes of Smith in the Mason City and Forest City area, or an Oct. 23 federal grand jury in which former Energae officials were subpoenaed. Federal officials have confirmed the visit to offices and the home, but have not discussed the outcome of the grand jury, or confirmed its existence. Meanwhile, Smith's investment offices in Mason City have signage removed and are up for lease, sources tell Agweek.
--A multi-day trial involving Energae-related entities was suddenly delayed. The Phoenix C&D Recycling Inc. vs. Michael Malecha et. al, case involves a supplier suing a former manager of the BFC Electric Co. LLC plant in Cedar Rapids. The case was set for Nov. 4, but has been delayed to an unnamed date. The plant, in which Energae had taken an ownership and management position, makes electricity from waste wood and other products and is part of the green energy program promoted by Energae to potential funding sources.
--A receivership petition hearing against Energae has been postponed two weeks and now is set for Nov. 18 at 10:30 a.m. in Cerro Gordo County. Plaintiffs are Clifton and Joshua Hylden, Park River, N.D., and the Rev. Lee Laaveg of the Spencer, Iowa, area.
Alan Rosca, one of the plaintiffs' attorneys, says this receivership petition is similar to an earlier one by North Dakotans that was settled out of court for an undisclosed sum. Rosca says part of the intent of the petition is to determine what Energae and its related entities own or control.
His firm's investigation so far suggests promoters may have raised a total of $6 million to $8 million for the "green energy" businesses related to Energae. Rosca and colleagues are interested in whether or how much earlier investors may have been paid by money from subsequent investors. They also want to know more about the levels of returns promised to later investors.
In March 2012, Smith promoted a sugar-beet-to-ethanol project in a mothballed Grafton, N.D., corn-ethanol plant. That project fell through, but some North Dakotans put money into the company.
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